Misery for drivers as 'greedy' Opec cuts production to keep prices ABOVE $100 a barrel

Motorists have been warned to expect crippling prices to continue at the pumps after the oil cartel OPEC cut production of crude to keep prices above $100 a barrel.

The AA said Arab-dominated OPEC was 'holding the world to ransom' and making citizens of the Britain and other Western nations pay the their price of their 'pure greed'.

OPEC nations - including Saudi Arabia, Kuwait, Iran, Iraq, Libya, the United Arab Emirates, Algeria, Nigeria, Venezuala and Ecuador - have around two-thirds of the world's known oil reserves, and account for 40 per cent of the world's oil production.

Tough times: Motorist groups are likely to accuse Arab oil bosses of greed after Opec decided to cut oil production

The AA also accused oil companies of 'profiteering' by failing to pass on the benefits of earlier falling oil prices which ended on Wednesday as OPEC tightened the supply tap.

UK motorists are missing out on cuts of between 2p and 4p a litre, says the AA.

And it warned that it was not just motorists who would suffer, with rising oil prices affecting the whole of the economy pushing up the costs of business and home heating.

The AA urged Prime Minister Gordon Brown to take concerted political and economic action with other Western leaders to persuade OPEC that such action is unacceptable - and ultimately not in their own interest.

It said OPEC's actions had echoes of the 1970s when OPEC, then spearheaded by Sheikh Yemani - restricted supplies to the West, causing turmoil in Western economies.

The AA said it was 'outrageous' that pump prices were rising even when oil prices were falling - before OPEC's intervention to arrest the fall.

On Tuesday night Brent crude fell below 100 dollars for the first time since the beginning of April - before rising to $101.27 dollars in the wake of OPEC's announcement.

The price of Brent crude climbed back above $100 U.S. dollars a barrel after traders reacted to Opec's decision to cut what it termed 'excess' supply.

Oil prices have fallen nearly 30 per cent from the 147 U.S. dollar high seen in July as projections of slower global economic growth has dampened demand. Wholesale prices are down around 18 per cent.

Black gold: Opec ministers meet to decide on how much oil to pump

But petrol prices on UK forecourts have not fallen as quickly, with average unleaded petrol down from July's peak of 119.7p to 112.7p at the weekend - a drop of nearly 6 per cent - before rising again to 112.8p.

Average diesel prices fell from 133.3p to 124.1p, just under 7 per cent at the weekend. But then went back up to 124.3p a litre.

AA president Edmund King said: 'Opec is holding us to ransom. Left to market forces, the prie of oil was coming down. Now OPEC is turning off the tap to keep its prices high.

'They've decided they want to keep oil prices above $100 a barrel and have intervened.

'Their decision to keep prices up looks like pure greed. That's bad news for British consumers.

'They holding us to ransom again, just like Sheikh Yemani did in the 1970s. We're being led by the nozzle.'

'And just when there was a a glimmer of hope that oil and pump prices may fall, it is scuppered by OPEC's intervention.'

He said that even allowing for the six week lag between oil prices hitting the pumps, motorists are still paying between 2p and 4p a litre more than the oil price suggests they should be paying.

He said: 'There is definitely evidence of profiteering by the oil companies.'

The oil cartel OPEC sets its objectives as 'to co-ordinate and unify petroleum policies among member countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry.'

Supermarkets such as Asda, Tesco and Morrisons have led the downward trend in petrol prices, slashing prices significantly and forcing neighbouring oil company sites to follow suit to compete.

But prices have remained high in areas where there is no supermarket outlet, says the AA.

Critics including the AA say oil giants are 'dragging their feet' - despite making billions of pounds in profits which have been branded 'obscene'.

Last month Shell unveiled record half year profits of nearly £8billion following BP's half year profits of £6.75billion. The oil companies deny 'profiteering' and say their prices reflect the market conditions.

The OPEC cartel, which concluded a meeting in Vienna said it would produce 28.8 million barrels a day, consistent with levels agreed in September last year.

But the outcome effectively meant member countries had agreed to cut back 520,000 barrels a day of 'excess' production. Countries regularly produce oil above the organisation's overall quota to maximise their profits when prices are high.

Energy analyst John Hall, of John Hall Associates, said: 'There's a general feeling that it's Opec's fault that oil prices are so high.'

He thought prices could now head up back to the 110 dollar a barrel mark in the coming months as a result of the meeting.

He said: 'By allowing the price of oil to rise too quickly to unrealistic levels during this year already, Opec has jeopardised price stability and will now have to be very careful to balance supply and demand and try to keep price levels acceptable to both producers and consumers.'

In its statement, Opec said the oil market was 'well supplied'. OPEC says oil costs as much as $50 a barrel to produce.

Opec's meeting finished as the International Energy Agency (IAE) lowered its global oil demand forecast for both this year and 2009 to reflect slower economic growth.

The IAE said OECD countries would use 48.4 million barrels per day this year, down from a prediction of 48.6 million made last month, falling to 47.9 million barrels in 2009.